Better world books

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Case study for Enhancing the revenue to $70 million and to moniter operation and distrubution work.

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Better world books

  1. 1. ACADEMIC CASE STUDY 27 April 2012
  2. 2. Project Name: Studying Challenges and Issues Customer Name: BWB INDEX 1. Preamble 2. History of the company 3. Analysis of the current market 4. Analysis of the company 5. Strategy for future market 6. Reference Issue Date:27 April 2012Author: Sireesh PALLIKONDA Document Status: Completed 2
  3. 3. Project Name: Studying Challenges and Issues Customer Name: BWB Preamble The Better World Books is for-profit business with a mission to capitalize on the value of used books to promote and fund nonprofit literacy program. The business has seen the excellent growth within short period of time. The study of the Better World Books has been made to understand the business model and strategize a model for people, technology and operation in a scope to generate revenue of $70 million in next three years. The data given from 2003 to 2009 is quite helpful analyzing the company. A concise online research has been made to understand the future trends of the books business. The study of the market gives an opportunity to understand the gaps in the market demands and the consumer perception. As per the requirements are understood, a business groundwork has been strategized for the company to with stand the future demands for potential areas of business. The study of market potential concisely projects the demands of investment and the operation. The insights of the study were focused on the changing reading behavior of the consumer. The current inclination of reading books is shifting form paper based books to digital books and audio books. How a company has to change with the market in order to survive and main its profits and what strategies would help Better World Books to continue its growing revenue has been briefly discussed in the study. Issue Date:27 April 2012Author: Sireesh PALLIKONDA Document Status: Completed 3
  4. 4. Project Name: Studying Challenges and Issues Customer Name: BWB History of the company Better World Books was established as a for-profit business with a mission to capitalize on the value of used books to promote and fund nonprofit literacy program. BWB has its headquarters in Mishawaka, Indiana. It is a brainchild of Xavier Helgesen, Chriss Fuchs, and Jeff Kurtzman. Under the leadership of David Murphy (CEO) BWB has seen progressing growth to triple digit revenue of $30 million. However in the process of evolution BWB has come across many changes. The company’s main two sources of growing inventory are campus collection program and the library discards and donation program. Better World Books sold the collected books through 23 online marketplaces, including Amazon.com, eBay, and their own online e-commerce site, betterworldbooks.com. The company has significantly invested in technology and account enterprise system, which has helped the company to sustain in the long-term. However the company has changed its warehouse three times since its launch. Moreover the growth has been significant in growing form $7000 to $30 million. The company sustained and been successful on the four pillars, the three founders and the CEO and vice president. The company which was having 15 employees in 2003 has grown to 200 employees by 2009. Better World Books was well balanced its social concern by donating 10% of revenue to various global literacy initiatives. However the company’s core strategies lies in its technology and logistics. Issue Date:27 April 2012Author: Sireesh PALLIKONDA Document Status: Completed 4
  5. 5. Project Name: Studying Challenges and Issues Customer Name: BWB Current Market Analysis We can see that technology has had a very positive effect on reading. We tend to read what is compressed and concise and which registers in our minds in a few minutes. Gone are the days where reading was a leisurely habit – today, it’s more on the go and in an instant. Also, reading has moved away from paper and towards electronics, which is a very good thing considering that we have to save paper in order to save the trees and save our environment. So yes, we can say that technology has changed the reading habit considerably, and it’s not all bad as you would think. The only drawback is that people’s attention spans have become shorter and we’re more pressed for time because we have so many things to do at once. However, we should get over our love affair with its physical ancestor and realize that, as with newspapers, rotary dial phones and reel-to-reel tape decks, the world has moved on. Digital rules and e-books now make more sense than papyrus. Tablets are a new breed of personal computers that aims to directly compete against netbooks. Tablets are slate-style computers that use a touch interface as the primary method of input. The iPad is the main tablet on the market today soon to be followed by many competitors. This is readers of ebook survey which was conducted in USA with samples of 739. The sample percentages clearly indicate that eBook reader and cell phones make the highest percentage. New tablets like the iPad, BlackBerry Playbook, and Samsung Galaxy Tab are fast and responsive. Tablets are very versatile. They can be used for web browsing, music/video playback, e-book reading, digital picture framing, and much more. Tablets are highly portable. Some tablets, like the Galaxy Tab, can function as a phone if needed. Issue Date:27 April 2012Author: Sireesh PALLIKONDA Document Status: Completed 5
  6. 6. Project Name: Studying Challenges and Issues Customer Name: BWB Not everyone was happy. There are still lots of people who believe in the hard paper books and inadequate access to digital gadgets and technology is compelling them to stick with hardcopies than eBooks. The best demonstration is In United States’ one public library system for every 34,000 residents, where as in China’s ratio is one per every 489,000 potential library users a vast gap to close no matter how fast growth is occurring. The revenues of paper book market having shrunk by a quarter since peaking in 1996 as consumers spend more time on the Internet and mobile phones. Amazon is now selling more ebooks than hardbacks. It’s just about to bring out a Kindle that will sell for about US$130. This is not good news for many publishers and distributors. Hence most of the countries in Asia and Middle East are not opened to the ebook business. For example if we look into “Japans market of e-book content totaled 53 billion yen ($569 million) in 2009”. But they are not yet ready for E-book business. Books business market is facing a decline in growth over the past two years. This is attributed to the overall weak economy and technology. Book store industry sales rose only 3.6% for last year whereas overall U.S. retail sales grew by 4.3%. The bookstore industry as a whole is going through a large consolidation. Previously, the market was dominated by local, small stores and regional chains. With the advent of the "superstore" as created by Barnes & Noble, the largest players in the market Issue Date:27 April 2012Author: Sireesh PALLIKONDA Document Status: Completed 6
  7. 7. Project Name: Studying Challenges and Issues Customer Name: BWB have been able to gather significant market share and drive many independent booksellers out of the market. If we look in to the reading habits most of the adult read books, nearly nine in ten adults reads books, with women notably more likely than men to do so. Paperback books are the most popular type of book read, reflecting their greater affordability. E- books, have a more limited appeal, with 18% claiming to read them, evenly split between fiction and non-fiction. Both e-books and audiobooks have a young reader profile, in contrast to the typical book reader, who tends to be older. 12% 88% Any book readers Any non-readers Issue Date:27 April 2012Author: Sireesh PALLIKONDA Document Status: Completed 7
  8. 8. Project Name: Studying Challenges and Issues Customer Name: BWB If we look into the segment of analysis academic and nonfiction books holds more than 50% share and the children books segment is never encouraged with ebook readings. Non- Academic/ fiction/referenc professional e 22% 34% School/ELT 6% Childrens Fiction 14% 24% Figure UK readers by segment However, this may be an advantage to the used bookstore industry. As customers cut back on purchasing, used bookstores will look more attractive to customers who still wish to purchase books. Therefore, we can anticipate that this may be a good time gain market share. Issue Date:27 April 2012Author: Sireesh PALLIKONDA Document Status: Completed 8
  9. 9. Project Name: Studying Challenges and Issues Customer Name: BWB Company analysis The growth of the BWB can be analyzed from the following table and the picture. The glance into the columns of the revenue and employees gives us little idea about the future challenges.2003 2004 2005 2006 2007 2008 2009BWB Launch Library discards Social and donation capitalist Establishment of regional program award officesFounders David Murphy Anday (CEO & warzonXavier President) (CTO)Helgesen,Chris Fuchs ,Jeff Kurtzman Backed an $20 Revenue of $ investment of 30 $4.05;Revenue <$1 10-15 160 200 employees employees employees 40K-50K books collected/ day 10K books sold/ Day 3000 - 3500sft 7500sft Paper product factory Issue Date:27 April 2012 Author: Sireesh PALLIKONDA Document Status: Completed 9
  10. 10. Project Name: Studying Challenges and Issues Customer Name: BWB The picture shows the diversification of the business into different areas. Henceforth we can understand that business is more concentrated on the east side of the country. 15 20 3 7 16 14 2 5 10 4 21 1 17 9 8 13 8 6 11 1. Launch of BWB in 2003 2&3 Contacting with Midwestern schools (Purdue, Michigan) in 2003 4 Chris Fuchs moved to Washington in 2003 5 Helgesen moved to san Francisco in 2003 6 Kurtzman moved to Texas in 2003 7&8 Hired regional directors in Boston and Atlanta in 2003 9-21 Regional director office have been setup form 2005-2008 Regional director were helpful in established the relations and collecting the books and helping in logistics. BWB is really dependent on the volunteer student group such as honors society and service group like circle-K. BWB has set a threshold of not having inventory more than 20 books, and the rejected books were either donated to various nonprofits or recycled. BWB paid $.50 Issue Date:27 April 2012Author: Sireesh PALLIKONDA Document Status: Completed 10
  11. 11. Project Name: Studying Challenges and Issues Customer Name: BWB for a qualifying book. Most of the times company paid the students groups out of cash flows. BWB started with the library discard and donations programs, technology of the BWB helped the libraries to understand sales demand and monitor the sales. The information systems have helped the BWB to monitor the inventory flow control, pricing. And development enterprise accounting system helped to clear the inventory quickly and gave estimates of cash flow. Issue Date:27 April 2012Author: Sireesh PALLIKONDA Document Status: Completed 11
  12. 12. Project Name: Studying Challenges and Issues Customer Name: BWB Strategy Adult Market The future of the business is more towards the technology and cash flow than logistics, we have observed in the market analysis there is shift in the consumer reading behaviors. Hence, BWB has to look into the segment of eBooks and audio- books, however the current market for internet book business is only 17% but there could be significant shift towards the e-reading in the near future. This shift can reduce the warehouse and inventories expenses for BWB, yet the new expenses will include author license costs and royalties. To promote eBooks, a new strategy has to be developed. As BWB is having good business relations with Amazon and eBay most of the eBooks can still be sold through them. Having tie-ups with the tablets and ebooks gadgets will promote BWB in big way. Constant monitoring of the new product releases such apple, sony and Samsung and integrating the technology where consumers can download the eBooks from BWB will enhance the chances of increased revenue. Student Market Even though this market is seasonal it is sustainable of the hard books because most of the students prefer to have hard copies for reference. The market of US is capitalized more towards the east, therefore there are good chance for collecting the books the in the central and western States. Attaining high visibility in the international level will increase the multifold as we have seen in the market analysis there is a huge potential business in China and Japan where people still desire to adhere for conventional reading. The visibility can be through media billboards and advertising. Other way of doing it is by holding the social concern, sponsoring potential candidates in the field of education and sports from poor countries. This will not only bring the good will, but also visibility. Understanding why people buy books People buy books because of two main reasons one is to increase their knowledge and other is for entertainment, other than this people buy books to gift someone. Issue Date:27 April 2012Author: Sireesh PALLIKONDA Document Status: Completed 12
  13. 13. Project Name: Studying Challenges and Issues Customer Name: BWB Hence having a tie-up with educational websites will give more chance of visibility to the people who want to enhance their knowledge. Similarly having a tie up with travel sites gives a choice to the travelers to buy some books on their vacations to read; usually people going on vacations would love to have hardcopy of books rather than eBooks. Online gift sites are another potential area for getting visibility. In implementing these strategies the company technology has to be further geared up with the new innovations and the operations team has to look into the coherence of the sites and the flow the inventory. If we look into the present statistics, the operations are 50,000 inflows and 10,000 out flow, which determines that the efficiency is 20%. To increase the efficiency BWB has to look opportunities to capitalize the markets. The increased efficiency will reduce the problems of the cash flows. Another policy of having an inventory of only 20 copies of a particular book is kind of losing business. Better yield management would elevate the price of the books which are in demand and decrease the inventory costs of the books which are not in much demand. Conclusion Better World Books is operating right now at efficiency of 20% on their sales with respect to the books they are collecting; this situation may demand huge cash flows to sustain. The increase in efficiency of the sales can solve the problems of the cash flows. Right now BWB is selling books with other online market places. More potential websites, where people are tempted to buy books should be targeted. Such as travel sites, educational sites and online gift sites. Moreover operating business in the demand areas such as Asia and Middle East will generate more revenues. Hence the BWB has to invest more on technology and manpower as they have well established distribution and operations system. Issue Date:27 April 2012Author: Sireesh PALLIKONDA Document Status: Completed 13
  14. 14. Project Name: Strategies and Challenges Customer Name: BWB Reference 1. http://www.publishingtrends.com/ 2. http://ibnlive.in.com/news/japan-book-market-resists-digital-shift/114713-19.html 3. http://adroitalien.hubpages.com/hub/Laptop-vs-Netbook-vs-Tablet-Which-Should-I- Buy 4. http://www.bplans.com/used_book_store_business_plan/executive_summary_fc.php 5. http://www.thejakartapost.com/news/2010/08/16/personal-technology-digital-books-are- changing-our-reading-patterns.html 6. http://winningreadings.blogspot.fr/2010/05/has-technology-changed-reading-habits.html 7. http://calimae.tumblr.com/ 8. http://www.digitalbookworld.com/2010/crossing-borders-on-demand/ 9. http://www.ehow.com/about_6705343_e_book-swot-analysis.html 10. http://wiki.answers.com/Q/What_are_some_reasons_why_people_read Issue Date: 27th April 2012Author: Sireesh PALLIKONDA Document Status: Completed 14

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